Government Wins Battle |Over Rare Gold Coins

(CN) — An en banc Third Circuit on Monday ruled a Pennsylvania family must return 10 rare Double Eagle U.S. gold coins, stolen from the U.S. Mint in the 1930s and now worth $80 million, to the U.S. government. Joan Langbord and her sons, Roy and David, discovered the gold Double Eagles in 2003 when they drilled open a safe-deposit box that had belonged to her late father, storied Philadelphia jeweler Israel Switt. The 1933 Double Eagles have a face value of $20 and were designed at the request of President Theodore Roosevelt by the sculptor Augustus Saint-Gaudens. Considered the most beautiful U.S. coin, 445,500 Double Eagles were struck at the Philadelphia Mint in 1933 during the depths of the Great Depression, but they were never put into circulation. The coins were ordered melted down into gold bars because President Franklin D. Roosevelt had ordered the nation’s banks to abandon the gold standard and outlawed the use of gold coins as American currency. There were supposed to have been only two Double Eagles left in existence, kept at the Smithsonian, but Secret Service learned in the 1940s that 20 coins had found their way into the hands of collectors. In 2002, the U.S. government auctioned off one coin it seized in 1996 for more than $7.5 million at Sotheby’s, making it at the time the most valuable coin ever auctioned. To this day, the buyer remains anonymous, known only as “Mr. Big.” When the Langbords sent their Double Eagles to the government for authentication, Uncle Sam snapped back that it would not return the coins because it considered them stolen goods. The Secret Service had investigated Switt decades earlier on the suspicion that he smuggled Double Eagles out of the Philadelphia Mint, but it never proved anything. After a trial on the government’s ensuing civil forfeiture proceeding, a jury found that the coins belonged to the government. A three-judge panel of the Third Circuit vacated that finding last year, however, saying the government failed to follow civil procedure. The Philadelphia-based federal appeals court agreed to reconsider the case en banc, and on Monday, ruled 9-3 in the government’s favor. “The records indicate that 445,500 Double Eagles were struck. Five hundred of those were sent to the Cashier, while the remaining 445,000 were sealed in a basement vault. Of the 500 held in the Cashier’s office, 29 were destroyed in tests to determine the coins’ purity and weight, 2 were sent to the Smithsonian, and the remaining 469 were placed in the basement vault. Then, in accordance with the Gold Reserve Act of 1934, the 445,469 coins left in the vault were ordered melted into gold bars. By this accounting, it is clear that not a single 1933 Double Eagle was ever authorized to be issued to the public – a fact to which both a 1933 Double Eagle historian and a forensic accountant testified,” Judge Thomas Hardiman said, writing for the full court’s majority. The Langbords failed to plausibly present a situation in which Switt could have innocently taken the coins out of the Mint, the court found. Instead, the coins must have been either stolen or embezzled. Although the government did not initially file a forfeiture proceedings against the 1933 Double Eagles, claiming that it merely repossessed its own property, its subsequent forfeiture action was not untimely under the Civil Asset Forfeiture Reform Act, the court said. The family’s nonjudicial civil forfeiture proceeding was incongruous, the court said, “akin to filing a petition for writ of habeas corpus on behalf of someone not in custody — mismatched and ineffective,” and did not bind the government to CAFRA’s 90-day period to file a response or return the property. Hardiman agreed with the Langbord’s argument that the trial court improperly admitted hearsay evidence embedded in the Secret Service’s reports on its investigation of Switt, but said that the error did not invalidate the jury’s decision. He affirmed the admission of evidence that Switt knew the possession of the Double Eagles was illegal, and was motivated to conceal his coins, finding that the evidence’s relevance outweighed the prejudice to the Langbords. “Taking all of this evidence together, the government showed that Switt knew that the 1933 Double Eagles were embezzled or stolen and that it was illegal to possess them,” Hardiman said. Judge Marjorie Rendell wrote the dissent, joined by two other judges. “The majority holds that the government did not commence a nonjudicial forfeiture proceeding, and thus avoided the dictates of CAFRA, based mainly on its buy-in to the Government’s audacity — the government’s say-so that it owned the 1933 Double Eagles and had no intention of forfeiting them,” Rendell said. “But in reaching this unprecedented result, the majority not only disregards how CAFRA works and what actually happened here, but also renders CAFRA’s protections largely meaningless and defies Congress’s intent in passing the statute.”